America's Most Cutthroat Christmas Tree Market

Each year, from November 24 to December 26, an unremarkable triangular plaza at the intersection of Broome Street and Sixth Avenue in New York is transformed into a costly slice of Christmas cheer.

"SoHo Square," says Scott Lechner, who pays the New York City Department of Parks and Recreation close to $50,000 a year to sell trees here, "is the most expensive site in the world." He doesn't sound proud of it.

But Lechner must bid high to stay ahead of his onetime protégé, George P. Smith, who has been on something of a spending spree since he outbid Lechner and took over his Washington Market space in 2007. Smith has also made waves with a huge takeover bid for the Marine Parkway spot in Brooklyn, and has tried to do the same in SoHo and elsewhere.

Smith now has seven locations; Lechner has nine. The two are bitter enemies. Lechner calls Smith an "unsavory individual," who was "fired by my organization for malfeasance and dishonorable conduct." ("He hates my guts," Smith says.)

"There are two insane people who are in a pissing match, basically."

Their venomous territory battle has repercussions for other vendors. "There are two insane people who are in a pissing match, basically," says George Nash, a farmer from Vermont who sells Christmas trees in Harlem. "They're spending insane amounts of money, warping the fabric of the tree structure."

The contested Washington Market space — one of 21 the parks department has auctioned off to vendors for the month — was the site, in 1851, of the first urban tree lot in the United States, for which a Catskill woodsman named Mark Carr paid a silver dollar in rent. Today, Smith says he plays close to $30,000 a year for a mere 33 days of sales.

Even in the nation’s most expensive ZIP codes, these rents are, for the moment, somewhat unusual. Rents for many other tree sales sites in the city remain in the low thousands. In 2011, a space on Central Park West was $1,150. DeWitt Clinton Park on West 44th St. was $2,500. Essex Playground, $3,960.

The density of Manhattan raises the stakes, since there are so few of the vacant lots that welcome tree vendors in say Chicago, Boston or Los Angeles. And though Christmas trees are one of the few things that can be sold on the sidewalk without a license (they are protected by the so-called "coniferous tree exception" of 1938), the park spaces are much larger.

The real worth of Christmas tree territory, though, derives from neighborhood tradition. Most customers get their trees from the same stand every year, endowing certain locations a valuable returning customer base. "We really sell an experience," says Nash. "We're all charming Vermonters, from the magic kingdom, merchants of joy... People work hard to establish a lot; it takes five or six years to get it going."

So SoHo's community value -- which Lechner has cultivated for years -- is driving the price of SoHo Square to the sky. Because the parks department offers four-year leases on Christmas tree stands without preference for previous lease-holders, a tree man's business is only as good as his next bid.

It’s a lesson that Lechner learned the hard way at Washington Market, where he has said that Smith used his knowledge as a former employee to outbid him on the sly. He calls it a "business backstab." Smith denies the charge. He says he was running his own tree business for years before he bid on the spot, and that any insider information he had would have been useless by that point.

"I got trapped in the vortex," Lechner says of the escalating price war. He would not discuss profits, but hinted that the rent for SoHo Square might be too high to turn a profit. "You can only sell so many trees," he says.

If Lechner is willing to lose money on SoHo Square, it's because he doesn’t want to seethe space fall into Smith's hands. (The last time the spot was on the auction block, Smith says he put in a four-year bid of $160,000 in an attempt to wrest SoHo Square from his former employer.)

Nash was more explicit on the profitability of the downtown price wars. "There is no way to sell that many trees," he says.

Smith insists that he does. "I'm the one who brought the bids to what they are today," he says. "But if you’re a good businessman, you can make a profit." He now runs seven sites in the city, and says he also pays over $25,000 for space at P.S. 40 at 2nd Avenue and 19th Street.

The typical rent, says Nash, who has been selling Christmas trees in the city for 38 years, ought to be from $1000 to $3000, allowing full-time farmer-vendors like himself to make a profit and keep tree prices relatively competitive with wholesalers and big box stores. As recently as 1984, TheNew York Times could only hint at rents "said to be as high as a $1000."

That's where Smith saw his opportunity. He sees himself as a disruptor in a market that was, until he arrived, stuck in the last century. "Everybody was in cahoots, and I said, 'I don't believe in private deals,'" he says. "If you run a fair, honest operation, there's money to be made in Christmas trees." Now, some rents in the city owned by vendors besides Smith and Lechner are creeping into the tens of thousands, such as that of Theodore Roosevelt Park (above), at 81st and Columbus, for which Kevin Hammer paid $19,425 in 2011.

For the past 30 years, as Smith sees it, this territory has been governed by collusion between the handful of major vendors who lease space from the city.

Certainly, they all know each other — many of them have worked for one another, as Smith did for Lechner — and they have an understanding about space what belongs to whom.

"For years, we never bid competitively on any one spot that was built up by a family," says Lechner.

"We respect each other’s territory, you don’t beat up against somebody else," Nash says. "It’s just not done."

It is now.

For the parks department, the new, aggressive bidding strategy is a windfall. Christmas tree permit revenue rose 58 percent from 2007 to 2008, to $144,959, and rose again, in the concession list for fiscal year 2011, to $188,233. (The city did not yet have figures available for this year.)

Competition for concessions is typically limited by price restrictions, but on Christmas trees, the Department of Parks has been flexible. The department authorizes each vendor’s prices individually, which has enabled prices to rise along with bids. For New Yorkers, that means the price of trees is steadily rising to levels that would shock residents of other cities. In 2010, a six-foot Fraser fir at SoHo Square ranged from $80 to $125. The Department of Parks' sample list of approved price ranges from 2011 indicates 10-foot Fraser firs running as high as $275. Prices on the street can be higher.

"The right hand doesn’t know what the left hand’s doing," Lechner says of the parks department’s method of distributing contracts to the highest bidder, regardless of business history and community relationships. "There’s no personal knowledge or expertise of the industry; it's like we’re selling hot dogs out here."

Smith disagrees. He thinks the open bidding system invites entrepreneurship.